November 8 was a shock. I believed that Trump’s misogyny, racism, xenophobia, Islamophobia and basic dishonesty would lead to a rejection by a large majority. I have come to agree with Greg Palast and others that years of Republican strategies to suppress the votes of members of the Obama coalition paid off in some key states. Palast persuasively argues that the election was actually stolen. For details see: http://www.gregpalast.com/election-stolen-heres/
I also agree that the anachronism of the Electoral College must be fixed. The will of the people has been thwarted. (By the way, that was the purpose of the Founders when they wrote the Constitution. They wanted a government shielded from the popular will. That’s why State Legislatures elected Senators and why Electors elected Presidents --- and these electors were initially NOT bound by the results of their state’s vote. The Founders distrusted “democracy” which is why there were property qualifications for voting in most states as well as the much praised “checks and balances.”) Before 2000 there were only two elections in our history where the popular vote was won by the electoral college loser. But in the last 16 years there have been two such elections --- the first had gave us the serious consequences of the war in Iraq. Let’s hope this one does less damage to the Republic.
However, the vote rigging by Republicans and the undemocratic Electoral College method of electing Presidents should not divert us from recognizing something very important. Too many members of the Obama coalition defected to Trump. Some Sanders supporters even voted for Trump. These former Obama voters are not racist misogynists. They are people who had expected Obama to make their lives better and as I noted in my last commentary for too many he hadn’t! That was the point of my last commentary where I quoted Steve Keen. Had these Obama voters believed that the Democratic Party would continue to strive to improve the economy and improve their lives, we would be welcoming Hillary Clinton as the first woman President of the United States.
These working class Trump voters were attracted by his attacks on “bad” trade deals and his promise to create millions of jobs. Listeners to my commentaries know that I have praised the work of my economist friend Dean Baker on why these trade deals are bad for average workers – not so much for Trump’s reasons that they cause a loss of manufacturing jobs but for the protectionism built into them for high salaried professionals. In other words, these trade deals put blue collar workers all over the world in competition with each other while strengthening the protectionism in copyright and patents. (The latter causes the explosion in drug costs in the US.) These deals also do nothing to increase the competition in professions like medicine where foreign trained doctors have to jump through so many hoops to get licenses in the US, that American doctors get paid much more than their overseas counterparts. Trump has never said a word about any of those aspects of “bad” trade deals. Though I am glad the Trans-Pacific Partnership is dead, I am not so sure it will make much of a difference.
Working class Obama voters who voted for Trump were also attracted by his claim that as an independent billionaire he was not beholden to the rich and powerful --- and he made a big deal about running against Wall Street interests. He promised to “drain the swamp” in Washington – reducing the power of lobbyists over Congress. He ran as a populist outsider who would shake things up and finally deliver for the American people on the very promises that led to the Obama victories in 2008 and 2012.
We are less than halfway between Election Day and Inauguration Day as I deliver this commentary and we are already beginning to see that just as with Trump University and the Family Foundation, Donald Trump is and always will be a self-enriching con man. How did Wall Street respond when Trump was elected? Did the billionaire class dump their stocks and put their money into safe haven investments in Gold or government bonds or foreign assets because they worried that President Trump would shut down their gravy train? No, The stock market took off in a boom that set new records. Investors know that a Trump Presidency with a Republican Congress promises greater enrichment for the haves and the have-mores. I cannot stress this enough. Working class voters who supported Trump may believe he will fight for them but the billionaires and their advisers are proving by their actions that they know he will make them richer and do nothing to increase their wage costs.
Who are the outsiders being brought into the government to shake things up? So far, except for the disgusting Steve Bannon, we see well known figures like former NYC Mayor Rudy Guiliani and even multimillionaire Mitt Romney as possible Cabinet members. The new Secretary of Education, Ms. DeVos is a pro-voucher, pro-charter school billionaire supporter of plans to privatize more of public education. Her role in almost destroying public education in Detroit is described in detail by an economist from New Orleans, Douglas N. Harris in the New York Times from November 25, 2016. See “Betsy DeVos and the Wrong Way to Fix Schools”
http://www.nytimes.com/2016/11/25/opinion/betsy-devos-and-the-wrong-way-to-fix-schools.html?_r=0
There is even a Goldman Sachs executive, Steven Mnuchin as a possible Secretary of the Treasury. He is one of the bottom feeders who got rich by foreclosing on people caught up in the Housing Bubble meltdown. For details see Lorraine Woellert, “Trump Treasury pick made millions after his bank foreclosed on homeowners. Steven Mnuchin's OneWest filed to take a 90-year-old woman's house after a 27-cent payment error.” (Politico: December 1, 2016) http://www.politico.com/story/2016/12/trump-treasury-foreclosed-homes-mnuchin-232038
Wilbur Ross, Trump’s pick for Secretary of Commerce is known as the “king of bankruptcy” for his ability to buy companies in bankruptcy and sell then at a profit after making sure the bankrupt company stiffs its workers and pensioners as much as possible. For details on Ross and Mnuchin see David Dayen “Wilbur Ross and Steve Mnuchin—Profiteers of the Great Foreclosure Machine—Go to Washington” The Nation (November 30, 2016)
And what about the much touted infrastructure investment projects? You would think that President Obama has done nothing since 2010. Actually, he has proposed major infrastructure investments in virtually every budget and the Congressional Republicans have resisted almost all of them because they refuse raise taxes to pay for them. The interstate highway system is the brainchild of President Eisenhower from over 60 years ago. It and the various airports, urban mass transit systems, port facilities, etc. have all been bought and paid for with taxpayer dollars.
Trump’s proposal, vague as it is, amounts to nothing but massive tax giveaways to companies to build things already planned. Economist Kevin DeGood argues that the reason we lack infrastructure spending is not the cost of capital. “The Trump plan calls for spending as much as $137 billion from the federal treasury in the form of tax credits to wealthy Wall Street investors. This massive subsidy would lower the cost of equity capital to a level roughly equivalent to municipal bonds.” DeGood said the problem lack of sufficient tax dollars, not a need for financing.
“If just having access to debt at 3 percent were all that project sponsors needed to kick off big projects, then that would have happened already,” he said. “We’re in the lowest cost financing universe that we’ve been in since World War II, and yet we don’t see explosive growth in construction activity because it’s a lack of tax revenue, not a lack of access to debt.”
( For more details see Ashley Halsey III “Progressive think tank: Trump’s $1 trillion infrastructure plan ‘shovels money at wealthy investors’.” Washington Post, December 1, 2016. ; https://www.washingtonpost.com/local/trafficandcommuting/report-trumps-1-trillion-infrastructure-plan-shovels-money-at-wealthy-investors/2016/12/01/ed0c3c16-b7dc-11e6-b8df-600bd9d38a02_story.html?utm_term=.cb42f814c31a.)
Look very closely when the proposal actually gets to Congress and you will see virtually no increase in federal spending to build things. The most obvious way to put construction workers to work and improve our infrastructure is to actually raise federal spending (not just grant tax credits). This will increase the amount of construction being done.
Workers who voted for Trump, please watch what he does. He’s a great showman and carnival barker --- “saving” 1000 jobs in Indiana while many others leave the country. He will, as always, talk a good game. But watch the actual results.
Michael Meeropol is professor emeritus of Economics at Western New England University. He is the author (with Howard Sherman) of Principles of Macroeconomics: Activist vs. Austerity Policies.
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